The focus of this paper is to integrate various perspectives on product architecture modularity into a general framework, and also to propose a way to measure the degree of modularization embedded in product architectures. Various trade-offs between modular and integral product architectures and how components and interfaces influence the degree of modularization are considered. In order to gain a better understanding of product architecture modularity as a strategy, a theoretical framework and propositions are drawn from various academic literature sources. Based on the literature review, the following key elements of product architecture are identified: components (standard and new-to-the-firm), interfaces (standardization and specification), degree of coupling, and substitutability. A mathematical function, termed modularization function, is introduced to measure the degree of modularization embedded in product architectures, by taking the key elements as the main variables. Various managerial and theoretical implications of the modularization function are drawn. For instance, the function can be used as a framework to aid to examine various leveraging forces behind new product development, manufacturing, and supply chain management policies of a firm. The modularization function also allows us to study the implications of modularization from different theoretical perspectives, such as resource-based view of the firm and transaction cost economics. Finally, the application of the modularization function and its limitations are discussed.
Key words: modularity, product architecture